1150 Seventeenth Street, NW, Washington, DC 20036
(Two blocks from Farragut North Metro)
The Shadow Financial Regulatory Committee (an independent committee of experts sponsored by AEI) released its latest findings at a press luncheon on Monday. The committee published two new statements, the first of which critiques the U.S. Department of the Treasury’s new cost estimates for the Troubled Asset Relief Program (TARP). The second statement approves the Jumpstart Our Business Startups (JOBS) Act.
The committee cited four fundamental errors in the new cost estimates for TARP, presented by Edward Kane of Boston College: First, the Treasury wrongly deducts Federal Reserve interest revenues in its cash-basis analysis. Second, the cash-basis calculation of cost ignores the projections of the special inspector general of TARP. Third, it is inappropriate to measure taxpayers’ costs on a cash basis. And last, the Treasury asserts—but does nothing to show—that the benefits and net gains to society from the program were large. The committee warned the Treasury against misleading the public with false claims of bailout profits and clever policymaking and urged it to be honest about the true costs of each rescue program.
Chester Spatt of Carnegie Mellon University then presented the committee’s statement in favor of the JOBS Act. The act relaxes restrictions on raising investment capital for emerging growth companies, or companies that are in the first five years of their initial public offering. It also raises the cap on “Regulation A” offerings from $5 million to $50 million and lifts the number of record shareholders privately held companies can have before they must go public from 500 to 2,000.
Finally, the JOBS Act exempts certain “crowd-funding” transactions from the Securities and Exchange Commission’s (SEC) registration requirements. Although the chairman of the SEC has criticized the JOBS Act for weakening protections for investors, the committee stated that the SEC’s objections are not well-grounded or offset by the act’s benefits.
The Shadow Financial Regulatory Committee (SFRC) is a group of publicly recognized independent experts on the financial services industry — including experts in banking, insurance and securities — who meet regularly to study and critique regulatory policies affecting this sector of the economy. During two closed sessions before the luncheon, committee members will discuss the latest in financial regulation issues, including Basel market risk capital requirements, the Dodd-Frank Act, Securities Exchange Commission issues and accounting issues. At a luncheon briefing following these sessions, SFRC members will give several statements and answer questions related to the topics at hand.
Registration and Luncheon
Richard J. Herring, (co-chairman), University of Pennsylvania
George G. Kaufman, (co-chairman), Loyola University Chicago
Marshall Blume, University of Pennsylvania
Charles W. Calomiris, AEI and Columbia University
Kenneth W. Dam, University of Chicago
Franklin Edwards, Columbia University
Robert Eisenbeis, Cumberland Advisors
Edward J. Kane, Boston College
Robert E. Litan, Brookings Institution and Kauffman Foundation
Catherine Schrand, University of Pennsylvania
Kenneth E. Scott, Stanford University
Chester Spatt, Carnegie Mellon University
Peter J. Wallison, AEI
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Marshall Blume is the Howard Butcher III Professor of Financial Management and the director of the Rodney L. White Center for Financial Research at the Wharton School of the University of Pennsylvania, where he has worked since 1967. He researches financial markets, investments, investment behavior and fixed-income securities. Blume is on the editorial boards of the Journal of Portfolio Management and the Journal of Fixed Income. He is on the board of the Measey Foundation and is an independent director of various CPA real estate investment trusts.
Charles W. Calomiris is a visiting scholar at AEI and co-director of AEI's program on financial market deregulation. He is the Henry Kaufman Professor of Financial Institutions at Columbia Business School and a research associate at the National Bureau of Economic Research. At AEI, Calomiris studies banking regulation, corporate finance and monetary economics. His most recent books are "China's Financial Transition at a Crossroads" (Columbia University Press, 2007) and "Sustaining India's Growth Miracle" (Columbia University Press, 2008).
Kenneth W. Dam is the Max Pam Professor Emeritus of American and Foreign Law and a senior lecturer at the University of Chicago Law School. He served as deputy secretary in the U.S. Department of the Treasury from 2001 to 2003 and at the U.S. Department of State from 1982 to 1985. Previously, he was executive director of the Council on Economic Policy and assistant director for national security and international policy at the Office of Management and Budget. Dam's work in the private sector includes serving as IBM's vice president for law and external relations and as president and CEO of the United Way of America. He is a member of the board of the Brookings Institution and serves as a nonresident senior fellow of that organization. Dam is also a board member of the Committee for Economic Development and was formerly chairman of the German-American Academic Council. He has been a board member of numerous nonprofit institutions, and he served for 13 years on the board of Alcoa.
Franklin Edwards is the Arthur F. Burns Chair in Free and Competitive Enterprise and a professor of finance and economics at the Columbia Business School. He has served as a visiting scholar at AEI and senior economist at the Office of the Comptroller of the Currency. His research interests include hedge funds, corporate governance, financial markets and regulation and derivatives markets. Edwards is the author of "The New Finance: Regulation and Financial Stability" (AEI Press, 1996) and the textbook "Futures and Options." He has also authored numerous articles dealing with financial institutions, hedge funds, corporate governance, derivatives markets, energy markets and financial regulation.
Robert Eisenbeis is the chief monetary economist at Cumberland Advisors, where he advises the company's asset managers on U.S. economic and financial market developments and their implications for investment and trading strategies. Eisenbeis was formerly executive vice president and director of research at the Federal Reserve Bank of Atlanta, where he advised the bank's president on monetary policy for Federal Open Market Committee deliberations and was in charge of basic research and policy analysis. Previously, he was the Wachovia Professor of Banking at the Kenan-Flagler School of Business at the University of North Carolina at Chapel Hill. He has also held senior positions at the Federal Reserve Board and Federal Deposit Insurance Corporation. Eisenbeis is a member of the Financial Economists Roundtable and a fellow of the National Association of Business Economics.
Richard J. Herring is a co-chair of the Shadow Financial Regulatory Committee as well as the Jacob Safra Professor of International Banking and the co-director of the Wharton Financial Institutions Center at the Wharton School of the University of Pennsylvania, where he has worked since 1972. His research areas include international banking, international finance and money and banking. He is the co-editor of the Brookings-Wharton Papers on Financial Services series, published by the Brookings Institution Press, and is on the editorial board of numerous journals. Herring has been a trustee of Scudder New York Funds since 1990.
Edward J. Kane is the James F. Cleary Professor of Finance at Boston College. Previously, he held the Everett D. Reese Chair of Banking and Monetary Economics at Ohio State University. He also consults for the World Bank, is a senior fellow in the Federal Deposit Insurance Corporation's Center for Financial Research and has been a longtime research associate of the National Bureau of Economic Research. Kane has served as a consultant for numerous agencies, including the Federal Home Loan Bank Board, the International Monetary Fund, the Federal Reserve, the Congressional Budget Office, the Joint Economic Committee and three foreign central banks. He served for 12 years as a trustee and member of the finance committee of Teachers Insurance and is a past president and fellow of the American Finance Association and a former Guggenheim Fellow. Kane was also president of the International Atlantic Economic Society and the North American Economics and Finance Association. Besides authoring three books, he has published widely in professional journals and currently serves on seven editorial boards.
George G. Kaufman is a co-chair of the Shadow Financial Regulatory Committee and the John F. Smith Jr. Professor of Finance and Economics at Loyola University Chicago, where he has worked since 1981. Previously, he was a visiting scholar and the acting director of research at the Office of the Comptroller of the Currency and was the deputy to the assistant secretary for economic policy at the U.S. Treasury Department. He has also worked at the Federal Reserve Bank of Chicago in numerous positions, including senior economist and assistant vice president. During his career, Kaufman has taught at the University of California-Berkeley, Stanford University, the University of Oregon and the University of Southern California. He is the executive director of the Financial Economists Roundtable, the co-editor of the Journal of Financial Stability, the founding editor of the Journal of Financial Services Research and the editor of Research in Financial Services
Robert E. Litan is the vice president of research and policy at the Kauffman Foundation, where he researches entrepreneurship and youth education, and a senior fellow in economic studies at the Brookings Institution. Litan was a co-founder and co-director of the AEI-Brookings Joint Center on Regulatory Studies and currently serves as an adviser to the AEI Center for Regulatory Studies (the AEI-Brookings Joint Center on Regulatory Studies' successor). He is a longtime member of the Shadow Financial Regulatory Committee and has written extensively on a wide variety of regulatory and financial topics. Litan was the principal drafter of the Financial Services Roundtable's report on insurance and mega catastrophes. His most recent books are "Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity" (Yale University Press, 2007, with William J. Baumol and Carl J. Schramm) and "Competitive Equity: A Better Way to Organize Mutual Funds" (AEI Press, 2007, with Peter J. Wallison).
Catherine Schrand is the John C. Hower Professor of Accounting at the Wharton School of the University of Pennsylvania. She has been actively involved in the accounting standard-setting process through her past service on the Financial Accounting Standards Committee of the American Accounting Association (AAA) and her involvement with the AAA/Financial Accounting Standards Board Financial Reporting Issues Conference. Her research focuses on risk management and disclosure and has been published in top-tier academic journals including the Journal of Accounting and Economics, the Accounting Review, the Journal of Finance, the Journal of Financial Economics, Review of Accounting Studies and Contemporary Accounting Research. Schrand is an associate editor of the Journal of Accounting and Economics, the Journal of Accounting Research and the Journal of Financial Services Research. Schrand is the author of "Earnings Quality" (Research Foundation of CFA Institute, 2004, with Patricia Dechow) and "Understanding Earnings Quality: A Review of the Proxies, Their Determinants and Their Consequences" (Journal of Accounting and Economics, 2010, with Weili Ge and Dechow).
Kenneth E. Scott is the Ralph M. Parsons Professor of Law and Business Emeritus at Stanford Law School. He is a leading scholar in the fields of corporate finance reform and corporate governance and is well versed in federal deposit insurance issues and federal banking regulation. As a senior research fellow at the Hoover Institution, he concentrates on legislative and policy developments related to comparative corporate governance, bank regulation and deposit insurance reform. Scott has extensive consulting experience, including turns with the World Bank, the Federal Deposit Insurance Corporation and the Resolution Trust Corporation, and, most recently, the National Association of Securities Dealers. He is also a member of the Financial Economists Roundtable and the State Bar of California's Financial Institutions Committee. Before joining the Stanford Law School faculty in 1968, Scott was general counsel to the Federal Home Loan Bank Board and chief deputy savings and loan commissioner of California.
Chester Spatt is the Kenneth B. and Pamela R. Dunn Professor of Finance and the director of the Center for Financial Markets at the Tepper School of Business at Carnegie Mellon University. He has been at Carnegie Mellon since 1979. From 2004 to 2007, Spatt served as the chief economist and the director of the Office of Economic Analysis for the U.S. Securities and Exchange Commission. He has researched and written extensively on market structure, taxation and asset allocations, pricing and valuation and the impact of information in the marketplace. Additionally, he is a member of the Financial Economists Roundtable and a fellow at the Teachers Insurance and Annuity Association - College Retirement Equities Fund. Spatt has been on the editorial board of numerous academic journals, including the Journal of Financial Markets, Real Estate Economics and the Journal of Financial and Quantitative Analysis. He was a founder and the second executive editor of the Review of Financial Studies, and he served as a member of the economic advisory board for NASDAQ from 2000 to 2002.
Peter J. Wallison holds the Arthur F. Burns Chair in Financial Policy Studies at AEI, where he co-directs the institute's program on financial market studies. He is also a co-chair of the Pew Financial Reform Task Force and a member of the congressionally authorized Financial Crisis Inquiry Commission. Wallison previously practiced banking, corporate and financial law at Gibson, Dunn & Crutcher LLP in New York and Washington, D.C. In 1986 and 1987, Wallison was White House counsel to President Ronald Reagan. From 1981 to 1985, he was general counsel of the U.S. Treasury Department, where he played a significant role in the development of the Reagan administration's proposals for deregulation in the financial services industry. He also served as general counsel to the Depository Institutions Deregulation Committee and participated in the Treasury Department's efforts to deal with the debt held by less-developed countries. Between 1972 and 1976, Wallison was special assistant to New York governor Nelson A. Rockefeller and, subsequently, counsel to Rockefeller when he was vice president of the United States.